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Tuesday, 17 March 15
NEARLY 17% OF US COAL PRODUCTION UNECONOMIC AT CURRENT MARKET PRICING - WOOD MACKENZIE
 COALspot.com: Close to 17% of forecast 2015 US coal production is at risk of idling or closure, totalling 162 million short tons (Mst), as these mine's total cash costs plus sustaining capital expenditures exceed current market pricing, according to Wood Mackenzie's latest coal market outlook.
Wood Mackenzie says that the majority of the coal at risk is produced in Central Appalachia where approximately 72% of the total output is unprofitable. Years of declining productivity, thinning seams, increasing strip ratios, more stringent government regulations, and a high paid workforce have taken their toll and made Central Appalachia the highest cost region within the US. Other US regions also have substantial amounts of coal at risk, ranging from 47% of production in Southern Appalachia to a low of eight percent in both the Western Bituminous and Powder River Basin. In aggregate, this equates to approximately 14% of US thermal coal production and 58% of metallurgical coal production being at risk.
Dale Hazelton, Senior Research Analyst at Wood Mackenzie explains, "Based on current economics there are a significant number of mines unable to cover their operating costs plus sustaining capital. Despite this, mine closures, while not rare, certainly aren't happening frequently. Part of the reason for this is the amount of thermal coal sold on the open market is very small compared to that sold under contract. Contracts can cover multiple years, and prices may have been agreed well before the current market's lows. A producer may also be able to beat the market prices as they have a valuable niche-quality coal, such as stoker coal, or the location of the mine is near an end-user providing a transportation advantage over competitors."
According to Wood Mackenzie, there are other reasons for not idling or closing a mine: "It is possible the company is actively shopping the assets and having them currently in operation is more attractive to buyers. A company may also need to generate certain levels of revenue or cashflow to avoid triggering debt covenants that result in accelerated debt payments or higher interest rates. Some companies may also be willing to temporarily lose a certain amount of money on some mines where the losses from operating are less than not yet high enough to require idling or closing the operation.
"This is particularly true for some of the assets recently purchased by new mining companies or private equity firms. In those cases, the companies understand that there will be some period of losses as management gets costs under control. The end-game here is to maintain operations and customer relationships until the eventual recovery," notes Hazelton.
However, Wood Mackenzie emphasizes that for prices to rise, fundamentally one of two things must happen: either the global demand for steel and power must increase or the supply of coal must decrease. Hazelton adds, "The growth prospects for steel demand remain tenuous at best as many countries’ economies remain fragile. The recent strength of the US dollar also encourages non-US producers to grow their production as a strengthening US dollar compared to their local currency effectively lowers their costs of production when denominated in US dollars."
Furthermore, natural gas prices in the US remain at very low levels, resulting in higher levels of coal-to-gas switching in power generation. Wood Mackenzie's outlook notes that additional cost cutting measures are starting to reach limits as producers globally have already cut costs significantly, serving to suppress coal prices further. Therefore, the only practical way for the market to get back into balance is for producers to cut production. "This needs to happen sooner rather than later, either voluntarily or involuntarily through bankruptcy, as the losses these mines are generating cannot be sustained," concludes Hazelton.
About Wood Mackenzie:
Wood Mackenzie is a global leader in commercial intelligence for the energy, metals and mining industries. We provide objective analysis and advice on assets, companies and markets, giving clients the insights they need to make better strategic decisions.
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Saturday, 28 March 15
THE DRY BULK FLEET AT BREAKING POINT - CLARKSONS
The severe oversupply in the bulkcarrier fleet has contributed to the current trough in the dry bulk market, putting considerable financial pressur ...
Friday, 27 March 15
INDONESIA: NEW REGULATION REQUIRES LETTER OF CREDIT FOR EXPORT OF PRODUCTS FROM NATURAL RESOURCES
The Minister of Trade issued Ministerial Regulation No. 04/M-DAG/PER/1/2015 (“Regulation No. 4/2015”) on 5 January 2015. Regulati ...
Friday, 27 March 15
WEEKLY U.S COAL OUTPUT FALLS 1.7% W-W; 7.9% Y-Y
COALspot.com – United States the world's one of the largest coal producers, produced approximately totaled an estimated 18.2 million ...
Thursday, 26 March 15
CHINA IRON ORE IMPORT FOR THE FIRST 2 MONTHS DECLINED BY 1.2 % Y-O-Y; PANAMAX AUSSIE/CHINA ROUNDS BEING FIXED IN THE $4 -5K RANGE - FEARNLEYS
Handy
There has been more activity in both hemispheres this week. Especially the USG market has picked up with more cargoes for prompter dates en ...
Thursday, 26 March 15
RATES FOR THE SMALLER SIZE SEGMENT CONTINUED TO IMPROVE LAST WEEK - INTERMODAL
To see green across the board is a rare occurrence in the Dry Bulk market nowadays and while the upside in which last week closed off is not of the ...
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- ASAPP Information Group - India
- Indonesian Coal Mining Association
- CNBM International Corporation - China
- Samtan Co., Ltd - South Korea
- Global Green Power PLC Corporation, Philippines
- Siam City Cement - Thailand
- Karaikal Port Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- Price Waterhouse Coopers - Russia
- GN Power Mariveles Coal Plant, Philippines
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Africa Commodities Group - South Africa
- Heidelberg Cement - Germany
- India Bulls Power Limited - India
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
- Ministry of Transport, Egypt
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Barasentosa Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- Chamber of Mines of South Africa
- Sindya Power Generating Company Private Ltd
- Energy Link Ltd, New Zealand
- Mintek Dendrill Indonesia
- Coalindo Energy - Indonesia
- Marubeni Corporation - India
- Attock Cement Pakistan Limited
- Sojitz Corporation - Japan
- The State Trading Corporation of India Ltd
- Chettinad Cement Corporation Ltd - India
- Orica Mining Services - Indonesia
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Bhushan Steel Limited - India
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- Georgia Ports Authority, United States
- VISA Power Limited - India
- Carbofer General Trading SA - India
- Sakthi Sugars Limited - India
- Mjunction Services Limited - India
- San Jose City I Power Corp, Philippines
- Thai Mozambique Logistica
- Mercator Lines Limited - India
- PTC India Limited - India
- Wood Mackenzie - Singapore
- Formosa Plastics Group - Taiwan
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
- Kaltim Prima Coal - Indonesia
- PowerSource Philippines DevCo
- Indian Oil Corporation Limited
- Power Finance Corporation Ltd., India
- Maharashtra Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- Uttam Galva Steels Limited - India
- Petron Corporation, Philippines
- Madhucon Powers Ltd - India
- Altura Mining Limited, Indonesia
- Interocean Group of Companies - India
- Larsen & Toubro Limited - India
- Australian Coal Association
- Mercuria Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- Standard Chartered Bank - UAE
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- Australian Commodity Traders Exchange
- Sarangani Energy Corporation, Philippines
- Posco Energy - South Korea
- Bharathi Cement Corporation - India
- Sree Jayajothi Cements Limited - India
- Bhatia International Limited - India
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Leighton Contractors Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Development Corp, Philippines
- Antam Resourcindo - Indonesia
- Global Business Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Rashtriya Ispat Nigam Limited - India
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- Electricity Authority, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aditya Birla Group - India
- Banpu Public Company Limited - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Parry Sugars Refinery, India
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Planning Commission, India
- Semirara Mining Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- New Zealand Coal & Carbon
- Romanian Commodities Exchange
- Siam City Cement PLC, Thailand
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- GMR Energy Limited - India
- Jindal Steel & Power Ltd - India
- Indika Energy - Indonesia
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- Indian Energy Exchange, India
- Goldman Sachs - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Orica Australia Pty. Ltd.
- White Energy Company Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Agrawal Coal Company - India
- Karbindo Abesyapradhi - Indoneisa
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- MS Steel International - UAE
- Pendopo Energi Batubara - Indonesia
- Thiess Contractors Indonesia
- Minerals Council of Australia
- PetroVietnam Power Coal Import and Supply Company
- Manunggal Multi Energi - Indonesia
- Renaissance Capital - South Africa
- Edison Trading Spa - Italy
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- The University of Queensland
- Aboitiz Power Corporation - Philippines
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Vizag Seaport Private Limited - India
- Parliament of New Zealand
- Eastern Coal Council - USA
- Gujarat Mineral Development Corp Ltd - India
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- GVK Power & Infra Limited - India
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- Jorong Barutama Greston.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Borneo Indobara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Kepco SPC Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- South Luzon Thermal Energy Corporation
- Billiton Holdings Pty Ltd - Australia
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Deloitte Consulting - India
- Krishnapatnam Port Company Ltd. - India
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- IEA Clean Coal Centre - UK
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kohat Cement Company Ltd. - Pakistan
- Bhoruka Overseas - Indonesia
- Bayan Resources Tbk. - Indonesia
- Essar Steel Hazira Ltd - India
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Economic Council, Georgia
- Port Waratah Coal Services - Australia
- Timah Investasi Mineral - Indoneisa
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- The Treasury - Australian Government
- European Bulk Services B.V. - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
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